Have
you ever wondered why stocks just seem to keep going up no matter
what happens? For years, financial markets have been behaving
in ways that seem to defy any rational explanation, but once you
understand the role that central banks have been playing everything
begins to make sense. In the aftermath of the great financial
crisis of 2008, global central banks began to buy stocks, bonds and
other financial assets in very large quantities and they haven’t
stopped since. In fact, as you will see below, global central
banks are on pace to buy 3.6 trillion dollars
worth of stocks and bonds this year alone. At this point, the
Swiss National Bank owns more publicly-traded shares of
Facebook than Mark Zuckerberg does, and the Bank of Japan is now a
top-five owner in 81 different large Japanese firms.

These
global central banks are shamelessly pumping up global stock markets,
but because they now have such vast holdings they could also cause a
devastating global stock market crash simply by starting to sell off
their portfolios.

Over
the years I have often been asked about the “plunge protection
team”, but the truth is that global central banks are the real
“plunge protection team”. If stocks start surging higher on
any particular day for seemingly no reason, it is probably the work
of a central bank. Because they can inject billions of dollars
into the markets whenever they want, that essentially allows them to
“play god” and move the markets in any direction that they
please.

But
of course what they have done is essentially destroy the
marketplace. A “free market” for stocks basically no longer
exists because of all this central bank manipulation. I really
like how
Bruce Wilds made this point…

One
indication of just how messed up and flawed the global markets have
become is reflected in the way central banks across the world are now
buying stocks. This has become a part of their response to correcting
the forces of past excesses. Their incursion into this bastion of the
free markets signals we have entered the era where true price
discovery no longer exists. The central banks are often viewed as
price-insensitive buyers, so this incestuous influx of money is in
some ways the ultimate distortion.

According
to Business
Insider,
global central banks are on pace to purchase an astounding
3.6 trillion dollars
in stocks and bonds in 2017.

You
can call this a lot of things, but it certainly isn’t free market
capitalism.

The
Swiss National Bank is one of the biggest offenders. During
just the first three months of this year, it bought 17
billion dollars worth
of U.S. stocks, and that brought the overall total that the Swiss
National Bank is currently holding to
more than $80 billion.

Have
you ever wondered why shares of Apple just seem to keep going up and
up and up?

Switzerland’s
central bank now owns more publicly-traded shares in Facebook than
Mark Zuckerberg, part of a mushrooming stock portfolio that is likely
to grow yet further.

The
tech giant’s founder and CEO has other ways to control his company:
Zuckerberg holds most of his stake in a different class of stock.
Nevertheless this example illustrates how the Swiss National Bank has
become a multi-billion-dollar equity investor due to its campaign to
hold down the Swiss franc.

It
is now the world’s eighth-biggest public investor, data from the
Official Monetary and Financial Institutions Forum show.

But
as shameless as the Swiss National Bank has been, the Bank of Japan
is even worse.

Today,
the Nikkei is essentially a giant sham. The Bank of Japan
regularly goes in and just starts buying up everything in sight, and
according to Bloomberg they
are on pace to become the largest shareholder in dozens of the most
prominent Japanese corporations by the end of 2017…

Already
a top-five owner of 81 companies in Japan’s Nikkei 225 Stock
Average, the BOJ is on course to become the No. 1 shareholder in
55 of those firms by the end of next year, according to estimates
compiled by Bloomberg from the central bank’s exchange-traded
fund holdings.

If
global central banks have the power to pump up these markets, they
also have the power to crash them.

Why
would they want to do such a thing?

I
can answer that question with just two words…

Donald
Trump.

If
the Comey
angle doesn’t
work, the elite could try to destroy Trump by engineering an
absolutely devastating stock market crash. Close to half the
U.S. population dislikes Trump anyway, and so it would be fairly easy
to get them to believe that Trump’s policies have caused a new
financial crisis. Of course that would be complete nonsense,
but in our society today the truth often doesn’t really matter.

So
here we go again. Total US business bankruptcies in May rose 4.7%
year-over-year to 3,572 filings, according to the American
Bankruptcy Institute.
That’s up 40% from May 2015 and up 10% from May 2014.

And
there’s another concern: Bankruptcy filings are highly seasonal.
They peak in tax season – March or April – and then fall off. The
decline in April after the peak in March was within that seasonal
pattern. Over the past years, filings dropped in May. But not this
year.

Without
unprecedented intervention by global central banks, financial markets
would have crashed long ago.

And
if they keep increasing their purchases of stocks and bonds, the
central banks may be able to prop things up for a while longer.

Who
knows? Perhaps with enough financial engineering they would be
able to keep this bubble going for years. Of course things
would start to get really awkward once they eventually
owned virtually
everything,
but I have a feeling that things will never get that far.

I
have a feeling that global central banks will eventually find an
excuse to start “unwinding their balance sheets”, and I have a
feeling that it will be at a time that is highly inconvenient for
President Trump.